Understanding Bonds

The three most critical items to remember when purchasing a bond include the par value, the date of maturity and the coupon rate. For more details click Bridgeport bail bonds service.

A bond’s par value refers to how much money you’ll receive when the bond reaches its maturity date. In other terms, once the bond hits maturity, you’ll get your original investment back.

The date of maturity is of course the date the bond reaches its full value. You’ll collect your initial investment on this date, plus the interest your money has received.

Corporate and state and local government bonds will be ‘branded’ until they reach maturity, when the company or issuing government returns the original investment along with the interest it has received so far. One can not ‘label’ federal bonds.

The discount rate is the interest you’ll be paying when the bond matures. The statistic is written as a percentage, and other statistics will be used to figure out what the value would be. A bond with a par value of $2000, with a coupon rate of 5 per cent, would earn $100 a year until maturity is reached.

Since banks don’t issue bonds, many people don’t understand how to go about buying one. That can be done in two ways.

You can either use a broker or brokerage company to make the purchase for you, or go directly to the government. If you are using a brokerage, a commission fee is more than likely charged to you. Shop around for the lowest commissions if you want to use a broker!

It’s not as hard to buy directly through the Government as it once was. There is a program called Treasury Direct that will allow you to purchase bonds, and all of your bonds will be held in one accountBusiness Management Articles, to which you will easily have access. This means you can stop using a broker or brokerage service.